Alarm bells are starting to ring in the hills of Himachal Pradesh, with a sharp fall in tax collections due to the slowdown in the economy.

Sources say collection of Value Added Tax (VAT) this year has recorded a growth of only five per cent as compared to the projected growth of 17 per cent. Normally, VAT collection varies between 15 to 20 per cent.

This shortfall in VAT is likely to result in a loss of Rs 300 crore or so.

Tourism, cement, power and mining are also seeing equally poor growth that could lead to bigger losses to the exchequer and adversely affect the overall economy of the hill state.

The growth in revenue from selling power by power-surplus Himachal has come down sharply from Rs 1,250 crore to Rs 700 crore in the last four years.

The debt burden has already touched Rs 31,500 crore.

The state government is only able to make around Rs 7,000 crore.

The remaining over Rs 21,000 crore for the budget comes from Centre under various schemes and also from loans .

This year the state government has already raised loans of nearly Rs 2,500 crore to meet out it's growing expenses.